Consider an economy that is described by the following: Autonomous consumption = 100 Autonomous investment = 100 Marginal propensity to consume = 0.75 a. What is the consumption function of this economy? b. Derive the equilibrium income of this economy? c. How large is the change in the equilibrium income if investment rises to 200?

Consider an economy that is described by the following: Autonomous consumption = 100 Autonomous investment = 100 Marginal propensity to consume = 0.75 a. What is the consumption function of this economy? b. Derive the equilibrium income of this economy? c. How large is the change in the equilibrium income if investment rises to 200?

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter9: Aggregate Expenditures

Section: Chapter Questions

Problem 11E

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